RITES (RITES) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 performance was muted due to a sharp decline in high-margin export and inspection revenues, with export revenue nearly nil versus INR 35 crore last year and a INR 25 crore YoY hit in QA business, impacting both top and bottom lines.

• Order book stood at ₹6,355 crore as of June 30, 2024, with 80+ new orders worth ₹1,336 crore secured in Q1FY25 and a fivefold increase in order intake compared to H1 last year.

• Board approved unaudited standalone and consolidated financial results for Q1 FY25, with revenue from operations at ₹453.78 crore (standalone) and ₹485.76 crore (consolidated).

• Interim dividend of ₹2.5 per share declared and 1:1 bonus share issue recommended, doubling equity capital, subject to shareholder approval.

• Signed major agreements, including supply of 200 BG passenger coaches to Bangladesh Railways and MoUs with DVC and UltraTech.

Financial highlights

• Consolidated operating revenue declined 10.8% year-over-year to ₹486 crore; standalone revenue fell 9.9% to ₹454 crore.

• Standalone Q1 FY25 net profit after tax: ₹64.86 crore; consolidated net profit after tax: ₹90.44 crore.

• Standalone EPS for Q1 FY25: ₹2.70; consolidated EPS: ₹3.29.

• Margins contracted due to lower exports and less profitable consultancy mix.

• Employee costs increased due to a net addition of 250 staff, reflecting a strategic ramp-up for order execution.

Outlook and guidance

• Sequential improvement in revenue and margins is expected from Q2 onwards, with efforts to reach FY24 levels by year-end despite Q1 weakness.

• Export segment expected to pick up in H2FY25 as supply to Mozambique and Bangladesh commences.

• Margins are expected to stabilize at current levels, with slight improvement as export and non-IR inspection revenues ramp up.

• Interim dividend and bonus issue reflect confidence in future cash flows and business stability.

• Q2 may face execution challenges due to heavy rains, but the company aims for growth in both revenue and margins as new orders are executed.